6 Sensible Reasons to Pay Off Your Home Loan Early

A mortgage is generally considered “good” debt because it fills a need (shelter) and is an investment for the homeowner. However, that doesn’t mean you should take the full 30 years to pay off what you owe.

A growing number of homeowners are now paying off their mortgages early, sometimes in half or even a third of the time. Finance experts like Dave Ramsey are even jumping on board the idea of mortgage payoff plans. Why bother throwing extra cash at your mortgage when that money could be used towards other investments?

Here are a few of the best reasons to payoff your home early:

-Save thousands.
By paying down your mortgage, you’ll owe less in interest. Over the life of the loan, that can add up to thousands (or even tens / hundreds of thousands) in savings.

-Protect your loved ones.
By owning your home straight-out, your family members will be in a better situation should you become incapable of working. A mortgage payment can be a heavy burden when there isn’t a steady paycheck coming in.

-Embrace stability.
Putting your money into the stock market may have a better chance at high returns. However, as we’ve seen in the past year, it also presents the possibility of major losses. A home is a more solid investment. Even if the value of the property declines, you still own a real, tangible asset.

-Prepare for the worst-case-scenario.
Mortgage debt is a lot like student loan debt: difficult to get rid of. If you find it necessary to declare bankruptcy, you will probably be required to keep making mortgage payments. Medical debt and credit card bills can be wiped out. But, if you don’t make your mortgage payments your home will fall into foreclosure.

-Plan for an early retirement.
For many homeowners, a mortgage is the biggest monthly expense. Many people work years past retirement age just to afford their payments. Direct your money into paying off your home early and you may be able to retire sooner than expected.

-Achieve independence.
Without the burden of a monthly mortgage payment, you’ll have more money to spend and more freedom to do what you want. Live overseas without worrying about making two payments, rent out your home for extra cash, or take out a reverse mortgage to support you in old age.

Holding on to a home loan does have some advantages, including tax breaks on your interest payments. However, the benefits of deciding to payoff mortgage debt early clearly outweigh the drawbacks.